Statement of H.E. Mr. Masood Khan, Ambassador of Pakistan to the United States at

I thank the Atlantic Council for hosting this timely conference on Resilience and Reform in Pakistan and choosing the most appropriate themes to discuss solutions for elevating Pakistan’s economy and polity to optimal levels.

I pay tribute to Mr. Fred Kempe for his outstanding leadership of the Atlantic Council. His immense convening power is the envy of the town’s thought leaders; and this was manifested by the enormously successful Distinguished Leadership Awards and Global Citizens Awards organized by the Council in Washington and New York this year. We are grateful to the Atlantic Council, for supporting The Pakistan Initiative that gives a voice to Pakistan in D.C. and is now becoming a clearinghouse for understanding Pakistan-US relations.

And, thank you Uzair Younus for the very important work you are doing and your able and astute stewardship of the Initiative.

My special thanks and tribute to Principal Deputy Assistant Secretary of State Elizabeth Horst for keeping the engines of US-Pakistan relations running all the time. She is a force of nature and a force multiplier for our ties. Thank you!

Let’s look at the global picture first.

Pakistan has a destiny. Our geography, our people and our ideals determine that destiny. We have a mission to fulfil and the resolve to go the distance. The wars of the past 40 years, though necessary at that time for peace and security, have left their scars and distracted Pakistan from its chosen path of economic progress. The dark shadows of that period are receding. One of our tasks is to redress this ill-deserved reputational damage done to us and burnish our brand, not by words but by actions.

We have outlived many doom and gloom forecasts; and so would we, this time. Our growth ran into headwinds but this year we did not default, kept our economy afloat and brought currency rates and inflation down. Remittances increased, from the US remaining stable at $ 3 billion, and foreign exchange reserves have improved. Pakistan has never defaulted on its debts; and we rode through the storms of floods and the pandemic. This is resilience.

Pakistan’s economic potential is much more than that of many countries of the world. According to the World Economic Forum, our economy should be the 20th largest by 2030. A World Bank study predicted that by 2047 Pakistan would climb to the 10th position. And as I speak, we are undertaking a raft of ambitious reforms to tap into Pakistan’s unmind potential to reach those goals.

Pakistan is undergoing multiple, wrenching transitions. I won’t call it a polycrisis. Name any state that is not facing excruciating stress in the region and beyond. We are experiencing our share of pain as we evolve.

Democracy is a choice that nations make. Pakistan has made that choice. And we have chosen the path of persistence whatever the costs. Soon we will hold elections to start a new parliamentary cycle and move towards political stability.

Pakistan is the fifth most populous country in the world of 230 million people. The median age is 22; nearly 64% are below the age of 30. Its middle class has soared to more than 80 million, which is also bilingual, making it the fourth largest English speaking nation. There are 190 million mobile telephone subscribers and 130 million broadband subscribers in Pakistan. Hundreds of thousands of tech professionals are joining the market every year.

Pakistan has a promising demographic profile and a profitable consumer market. We have our own common market that extends to East, Central and West Asia; as well as to the Middle East and Africa. We have a strong and dynamic private sector, both formal and informal, now buoyed by the tech sector. Informal economy accounts for 75% of the jobs and 50% of national income.

Pakistan and the United States have put their relations on an even keel to build on their security ties and forge economic, technological and cultural partnerships. We are thankful to the US leadership for catalyzing this change. Several dialogues conducted in the past one year on trade, investment, energy, climate change, health, science and technology, defense, counterterrorism and counternarcotics have created an enabling environment.

So, I would say, this is a good time for US businesses to increase their investments in Pakistan and Pakistani traders and entrepreneurs to enhance their exposure in the US markets.

A question will be asked during this conference whether Pakistan is investable. My answer to that question is that Pakistan is already attracting foreign investment and some of the new and additional investments are maturing right now.

The first phase of the China-Pakistan Economic Corridor concluded in 2019 with the completion of early harvest energy and infrastructure projects. The second phase that focuses on industrial development, special economic zones, agriculture, IT, vocational training, education, healthcare and poverty alleviation is underway with estimated financing of US $37 billion. We are on track.

Canadian firm Barrick Gold has invested in Pakistan’s Reqo DiQ copper-gold mine, which has one of the largest world deposits, with a capex cost of $ 7 billion. Barrick Gold and Saudi wealth fund – Public Investment Fund – are in talks for equity participation in this mine. Riyadh has announced to set up a $14 billion refinery project. UAE has concluded a deal for airport management. Other Gulf nations – including Qatar and Bahrain – have shown keen interest in high value IT, agriculture, and airport terminal projects. The financial volume of these projects should increase to $44 billion in coming decades. Other important brands – Nestle, Huawei and Telenor – are successful in Pakistan.

So the real question is not: is Pakistan investable but how its investments can be scaled up to make it a regional competitor and global economic player.

The US has a standing advantage because of American companies’ experience in Pakistan spanning decades and their existing investment infrastructure in our country.

The United States has consistently been one of Pakistan’s largest sources of foreign direct investment. Over the past three years, US enterprises have invested more than $1.5 billion in Pakistan. Both sides realize that this level of FDI is not enough and needs to be increased.

What many people do not know is that, over the decades, some 80 US companies, many of them Fortune 500, are running successful operations in Pakistan in consumer goods, food chains, agribusiness, financial services, renewable energy, ICT, pharmaceuticals and healthcare. These include Pepsi, Coco-Cola, General Electric, Abbot, Proctor and Gamble, Pfizer, Philip Morris, Honeywell, Oracle, Amazon, Microsoft, Dell, IBM, Cargill, Caterpillar, McDonalds, Pizza Hut, and Domino’s Pizza. None of them is moving out. This is resilience.

The initiative of US-Pakistan Green Alliance taken last year is indeed groundbreaking. This enables Pakistan to promote renewable energy and make agriculture sustainable and productive. Methane abatement, electric vehicles, fertilizer efficiency, and healthy animal feed are priorities under its framework. The Green Alliance will help us enhance climate resilience and advance our goals to increase the share of clean energy in our energy mix to 60% from its present 34% by year 2030.

The Green Alliance also builds mutual trust, projects the United States’ soft power and provides an interlocking platform for other initiatives.

We have opened new doors for foreign investment in Pakistan in five sectors: IT, energy, agriculture, mining and defence production. In June this year, a Special Investment Facilitation Council (SIFC) was created to act as one window for foreign investors to facilitate speedy approval of projects, fast-track project development, and oversee implementation. The purpose is to spur economic growth, integrate our economy to international capital markets and guarantee continuity of policies.

New incentives are being given to investors.

In the IT sector, these include income tax credit on exports, zero taxes on registered tech start-ups, tax holiday for venture capital funds, 100% repatriation of investments and dividends, and preferential commercial loans.

In the energy sector, incentives include tax exemptions, concessions on plant and machinery import, 100% foreign ownership, force majeure and change in law, tariff indexation and a more effective dispute settlement with the provision for arbitration under UNCITRAL rules.

In the mining sector, we are offering 100% foreign equity, expatriate facilitation, export processing zones, inclusion in the China-Pakistan Economic Corridor, and repatriation of capital and profits. Foreign investors are also now allowed to own 60% agricultural projects and 100% corporate farming.

Pakistan remains the 8th most vulnerable country to climate change, with its global greenhouse gas emissions less than 0.4%. The frequency and ferocity of floods, cyclones, glacial melt, heat waves, drought and earthquakes require both domestic preparedness and resilience, as well as international support. The World Bank has estimated that Pakistan would need nearly $ 350 billion till 2030 for resilience alone.

You would recall that Pakistan played a key role to convince last year’s climate summit participants to create a Loss and Damage Fund, but the G20 countries, the biggest emitters, are not fully prepared to either reduce emissions or bridge climate finance deficits. Climate justice is a far cry but awareness has grown that it is not just countries like Pakistan but the entire globe is at risk.

Three courses of action are available to us: One, refining our National Adaptation Plan by developing climate smart agriculture and efficient water conservation systems. Two, the International Financial Institutions and the United Nations need to enhance direct financing to governments for alternate energy and climate resilient agriculture. Three, leveraging the strength of the private sector to deal with this challenge.

Pakistan tech startups are seeing a dramatic rise.

From a meagre $10 million venture capital funding in 2018 per year, global VCs and other investors are pouring in $1 billion annually now. Total tech startup turnover in the last fiscal year is $3 billion; e-commerce in Pakistan earned about $6 billion. This is just the beginning. Pakistan is not far behind in the tech revolution that has taken off in South East Asia, Middle East and North Africa. The gap is now closing. Pakistan is catching up.

Digitization of economy, e-commerce and improved supply chains are driving this change. Tech startups have been particularly successful in fintech, retail, pharmacy, diagnostics, telemedicine, education, groceries and transportation.

American VCs that are betting their money on Pakistan include Kleiner Perkins, Target Global, Tiger Global, Dragoneer, Acrew, Sequoia Capital. Add to that UK’s Kingsway, Speedinvest from Europe, UAE’s Sharooq, and Chinaccelerator and Fatimah Gobi from China investing in pre-seed, seed and early stage startups in Pakistan.

To reach the next stage, our markets have to ensure continuity of current flows; move towards startups that are less capital intensive; and diversify our targeted markets by going beyond Pakistan to Central and West Asia, Middle East and North Africa. This is a natural business ecosystem for Pakistan. A two-way trend has already started: Pakistan startups are doing business in the Gulf region and companies based in Saudi Arabia and UAE are marketing their products in Pakistan.

Artificial Intelligence and other new technologies – blockchain, robotics, 3-D printing, synthetic biology – are the next wave of technology. They will be as disruptive as previous technological breakthroughs were. To prepare for this change, our universities have introduced these disciplines, with supporting incubation centers for innovation.

Above all, our one million strong diaspora community has become a sturdy bridge between Pakistan and the US and a key stakeholder in Pakistan’s economy with their growing investments in healthcare, education, hospitality, financial services, real estate and social development.

We are vigorously pursuing institutional reforms on the above agenda. Our minimum goals right now are macroeconomic stability and social development, fiscal discipline, absorption of external shocks and improvement in business climate. In addition, with the help of the World Bank, we are streamlining our current narrow, distortive and unequal tax system to make it broad-based and equitable in order to finance human development, infrastructure development and climate resilience. And overarching reforms being undertaken aim to unlock ease of doing business, enforce intellectual property rights, ensure stable payment cycles and accelerate capital formation. We will stay the course.

So, my message to the conference participants is that we will benefit from your wise and informed counsel for a resilient Pakistan preparing for stellar economic growth to attain human security for its people and shared prosperity in our extended neighbourhood.

I thank you.